Lithuania’s economy is expected to grow 2.8 percent this year and 3.2 percent next year, while Estonia’s GDP growth is forecast at 2 percent in 2016 and 2.4 percent in 2017.
"The beginning of the year was weak, but in the coming quarters the growth should speed up, this can be seen also in the improvement of the economic sentiment index," said Gaspuitis.
He said that Latvia’s economy is positively affected by a good growth of domestic demand, supported by a strong wage growth. As inflation has been close to zero, purchasing capacity is growing.
The economist said that there was a very large growth in trade of non-food products, for example, 6.5 percent in Latvia and even 11.1 percent in Estonia last year. "People have money, they are buying new cars, household appliances, at the same time, they do not risk with long-term investments, for example, housing loans," the economist said.
Gaspuitis said that investment activity still was low, and foreign direct investments have been shrinking for several years. "It has been due to geopolitical uncertainty, delays with availability of the EU structural funds. Attraction of investments is a global challenge and it is not realistic to dream about a very steep growth," he said.
Meanwhile the Finance Ministry forecasts Latvia's GDP to grow 3% in 2016 and 3.3% in 2017.